BEFORE THE
PENNSYLVANIA PUBLIC UTILITY COMMISSION
Application of Pentex Pipeline Company
for Approval to Amend its Existing
Certificate of Public Convenience to Begin
to Offer, Render, Furnish, or Supply Natural
Gas Gathering or Conveying Services by
Pipeline to its Existing Customer and to the
Public in the Borough of Wyalusing and in the
Townships of Wyalusing, Herrick, Terry,
Tuscarora, Stevens and Wilmot in Bradford
County, Pennsylvania
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A-2011-2230314
INITIAL DECISION
GRANTING PETITION TO WITHDRAW APPLICATION
Before
Dennis J. Buckley
Administrative Law Judge
On March 8, 2011, Pentex Pipeline Company (Applicant or Pentex) filed an
Application for approval to amend its certificate of public convenience so as to add natural gas
gathering services to the services that it already performs for an existing transportation customer,
Cargill Meat Solutions Corporation, and for local natural gas producers in Wyalusing, Herrick,
Terry, Tuscarora, Stevens and Wilmot Townships in Bradford County, Pennsylvania. Notice of
the Application appeared in the Pennsylvania Bulletin of March 26, 2011.1
On April 5, 2011, Diane V. Ward, a resident of Terry Township, Bradford
County, Pennsylvania, filed a Protest to Pentex’s Application asking that the Commission deny
the Application.
1
41 Pa. B. 739
On April 6, 2011, Trudy Gerlach, a resident of Wyalusing, Pennsylvania, filed a
Protest to Pentex’s Application asking that the Commission deny the Application. Also on
April 6, 2011, Mr. Joseph Shervinski, a resident of Wyalusing, Pennsylvania, filed a Protest to
Pentex’s Application asking that the Commission deny the Application.
On April 8, 2011, the Pennsylvania Office of Consumer Advocate (OCA) filed a
Notice of Intervention in this proceeding.
On April 11, 2011, Laurel Mountain Midstream, LLC (Laurel Mountain), and
MarkWest Liberty Midstream & Resources, LLC (MarkWest) filed Protests in this proceeding.
On April 25, 2011, Pentex filed an Answer to the Protest of Ms. Ward and asked
that her Protest be dismissed.
On April 26, 2011, Pentex filed Answers to the Protests of Ms. Gerlach and
Mr. Shervinski and Preliminary Objections moving for the dismissal of the Protests of
Ms. Gerlach and Mr. Shervinski on the basis of lack of standing of the Protestants.
On April 29, 2011, Pentex filed Preliminary Objections moving for the dismissal
of the Protests of Laurel Mountain and MarkWest.
On May 2, 2011, Pentex filed Answers to the Protests of Laurel Mountain and
MarkWest.
On May 9, 2011, Laurel Mountain and MarkWest filed Answers to the
Preliminary Objections of Pentex.
On May 13, 2011, Ms. Gerlach filed an Answer to the Preliminary Objections of
Pentex.
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On May 18, 2011, the Honorable Tina Pickett, Representative for the 110th
Legislative District, filed a letter with the Commission asking that a public input hearing in this
case be scheduled in Bradford County.
On May 25, 2011, the undersigned issued an Order dismissing the Preliminary
Objections relative to the Protests of Ms. Gerlach and Mr. Shervinski.2 On May 27, 2011, a
further Order was issued dismissing the Preliminary Objections relative to Laurel Mountain and
MarkWest.
On June 6, 2011, a Notice setting July 6, 2011, as the date of the Initial prehearing
Conference in this case was issued by the Office of Administrative Law Judge (OALJ).
On June 8, 2011, I issued a prehearing Order in accordance with the provisions of
66 Pa.C.S.A. §§ 331 and 333.
On June 21, 2011, the Commission’s Office of Trial Staff (subsequently, the
Commission’s Bureau of Investigation and Enforcement or BIE) filed a Notice of Appearance in
this case. This was followed by a Petition to Intervene on June 29, 2011.
On July 6, 2011, a prehearing conference was held at the Harrisburg Office of the
Commission. Pentex, the OCA, the BIE, Laurel Mountain, MarkWest, Ms. Ward, Ms. Gerlach
and Mr. Shervinski attended that prehearing conference.3
On July 12, 2011, a Prehearing Order was issued setting September 13, 2011, as
the date of the public input hearing in Wyalusing, Pennsylvania.
On July 18, 2011, and as the result of an issue raised by Ms. Ward at the
prehearing conference of July 6, 2011, Pentex filed a letter stating that the townships identified
Pentex’s objection to the Protest of Ms. Ward and request for dismissal of the same was denied at the
prehearing conference on August 30, 2011.
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3
Ms. Ward, Ms. Gerlach and Mr. Shervinski participated telephonically.
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in its original Application did not include Wyalusing Borough, but that this was an oversight and
that Pentex desired Wyalusing Borough to be included in its expanded service territory.
On July 22, 2011, Laurel Mountain and MarkWest filed a Joint Motion to
Suspend Proceedings pending completion of the case in Application of Laser Northeast
Gathering Company LLC, Docket No. A-2010-2153371 (Laser).
On August 11, 2011, Pentex filed an Answer to the Joint Motion opposing the
Joint Motion.
On August 26, 2011, a Notice of a further prehearing conference was issued
setting September 1, 2011, as the date of that prehearing conference. On August 29, 2011, that
prehearing conference was re-scheduled to August 30, 2011.
On August 30, 2011, a further prehearing conference was held at the Harrisburg
Office of the Commission. Pentex, the OCA, the BIE, Laurel Mountain, MarkWest, Ms. Ward,
Ms. Gerlach and Mr. Shervinski attended that prehearing conference. The primary purpose of
the prehearing conference was to hear oral argument on the Joint Motion to Suspend
Proceedings, but the parties were also advised of the Commission’s August 25, 2011 ruling in
Laser, and their attention was directed to the list of questions directed by the Commission to the
parties in that case.
On September 2, 2011, I issued an Order denying the Joint Motion to Suspend
Proceedings.
On September 7, 2011, with the public input hearing scheduled for September 13,
2011, less than a week away, Tropical Storm Lee moved into Pennsylvania with torrential rain
and flooding which caused extensive infrastructure damage. On September 9, 2011, Ms. Ward
and Ms. Gerlach contacted me and asked if the public input hearing could be re-scheduled. None
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of the other parties objected to this, and the public input hearing was re-scheduled to October 7,
2011.4
On September 12, 2011, Pentex filed proof of publication of its revised
Application including the Borough of Wyalusing.5
On October 7, 2011, a public input hearing was held at the Wyalusing Volunteer
Fire Department, Wyalusing, Pennsylvania. Two sessions were held, at 1:00 p.m. and 6:00 p.m.
Sworn testimony was presented by: Ms. Carolyn Knapp, Mr. Steve Chant, Ms. Diane Ward,
Ms. Laura Hewitt, Mr. Charles Gerlach, Ms. Trudy Gerlach, Ms. Megan Wolfe, Mr. Greg White,
Ms. Shellie Northrop, Mr. John Bromberg, Ms. Michelle Georgescu, and Mr. Fred Saxer. With
the exception of Mr. White, the witnesses all stated their opposition to the Application. Further,
Ms. Ward presented eleven exhibits (Ward Exhibits A-K) which were admitted into the record
without objection.
On October 18, 2011, a further prehearing Order was issued revising the
procedural schedule in this matter at the request of Pentex. That request was not opposed by any
of the parties or Protestants.
On November 4, 2011, Pentex filed a Motion for Suspension of the Procedural
Schedule in this case. None of the parties or Protestants in this case opposed the Motion. A
prehearing Order granting the Motion was issued on November 4, 2011.
On December 5, 2011, Pentex filed a Petition for Leave to Withdraw its
Application at this docket. On December 27, 2011, Laurel Mountain and MarkWest filed a Joint
Answer to the Petition stating their support of the Petition and asking that the Commission
approve the same. On December 29, 2011, Diane Ward filed a letter/Answer to the Petition
4
As a public input hearing had also been planned for this date, both an afternoon and evening session were
scheduled for October 7, 2011 to make up for the cancelled September 13, 2011 public input hearing.
5
Notice had also been provided in the Pennsylvania Bulletin of September 10, 2011, 41 Pa.B. 4926.
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agreeing that while granting the Petition is in the public interest, the questions raised at the
public input hearing of October 7, 2011, remain unanswered and should be answered.
This matter is now ready for resolution.
FINDINGS OF FACT
1.
Pentex Pipeline Company is a Commission-certificated public utility that
provides natural gas transportation services by pipeline in Bradford County, Pennsylvania.
Pentex is a Texas corporation authorized to do business in the Commonwealth of Pennsylvania.
2.
On March 8, 2011, Pentex filed an Application for approval to amend its
certificate of public convenience so as to add natural gas gathering services to the services that it
already performs for an existing transportation customer, Cargill Meat Solutions Corporation,
and for local natural gas producers in Wyalusing, Herrick, Terry, Tuscarora, Stevens and Wilmot
Townships in Bradford County, Pennsylvania. Subsequently, Pentex amended its Application to
include the Borough of Wyalusing in its request.
3.
On October 7, 2011, a public input hearing was held at the Wyalusing
Volunteer Fire Department, Wyalusing, Pennsylvania. Sworn testimony was presented by:
Ms. Carolyn Knapp, Mr. Steve Chant, Ms. Diane Ward, Ms. Laura Hewitt, Mr. Charles Gerlach,
Ms. Trudy Gerlach, Ms. Megan Wolfe, Mr. Greg White, Ms. Shellie Northrop, Mr. John
Bromberg, Ms. Michelle Georgescu, and Mr. Fred Saxer. With the exception of Mr. White, the
witnesses all stated their opposition to the Application. Ms. Ward presented eleven exhibits
(Ward Exhibits A-K) which were admitted into the record without objection.
4.
On December 5, 2011, Pentex filed a Petition for Leave to Withdraw its
Application at this docket.
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5.
On December 27, 2011, Laurel Mountain and MarkWest filed a Joint
Answer to the Petition stating their support of the Petition and asking that the Commission
approve the same.
6.
On December 29, 2011, Diane Ward filed a letter/Answer to the Petition
agreeing that while granting the Petition is in the public interest, the questions raised at the
public input hearing of October 7, 2011, remain unanswered and should be answered.
DISCUSSION
The withdrawal of pleadings in a contested proceeding is governed by the
Commission’s regulation at 52 Pa. Code § 5.94(a), which states:
Except as provided in subsection (b), a party desiring to withdraw
a pleading in a contested proceeding may file a petition for leave to
withdraw the appropriate document with the Commission and
serve it upon the other parties. The petition must set forth the
reasons for the withdrawal. A party may object to the petition
within 20 days of service. After considering the petition, an
objection thereto and the public interest, the presiding officer or
the Commission will determine whether the withdrawal will be
permitted.
Pentex has filed a Petition for Leave to Withdraw its Application to amend its
certificate of public convenience. In making this request, Pentex points to the Commission’s
August 25, 2011 Order in Application of Laser Northeast Gathering Company, LLC for
Approval to Begin to Offer, Render, Furnish, or Supply Natural Gas Gathering and Transporting
or Conveying Service by Pipeline to the Public in Certain Townships of Susquehanna County,
Pennsylvania, Docket No. A-2010-2153371 (Order entered August 25, 2011) (Laser
Reconsideration Order). That Order denied the Petition for Reconsideration filed by the
Pennsylvania Independent Oil and Gas Association (PIOGA) in that proceeding and granted in
part and denied in part the Petition for Reconsideration filed by Laurel Mountain and MarkWest
in that proceeding. After reviewing the Laser Reconsideration Order, Pentex revised its
business strategy and: (1) is no longer willing to serve any and all potential customers; (2) will
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use contracts to select and serve a defined and limited group of customers; and, (3) is no longer
committed to expanding its facilities to meet the demand of the public. Pentex further states that
it will operate as a private pipeline.6 Petition at 2-3; ¶ 4.
In the event that Pentex’s operations change in the future, Pentex reserves the
right to submit a request to amend its certificate of public convenience or to otherwise request a
determination from the Commission as to whether a proposed offering by Pentex is subject to the
Commission’s jurisdiction. Petition at 3; ¶ 5.
Finally, Pentex states that it is in the process of evaluating the issues raised at the
October 7, 2011, public input hearing in Wyalusing, Pennsylvania, regarding Pentex’s corporate
status and filing of reports with the Commission. Pentex states that it intends to submit “any
necessary filings to the Commission regarding its current public utility operations by the end of
January, 2012.” Petition at 3; ¶ 6.
In their Joint Answer in Support of the Petition for Leave to Withdraw the
Application (Joint Answer), Laurel Mountain and MarkWest request that the Commission
approve the Petition. Laurel Mountain and MarkWest contend that granting the Petition is in the
public interest. Laurel Mountain and MarkWest reach this conclusion because:
Pentex, in the Petition to Withdraw, retracts its previous statements
that it is willing to serve any customer requiring transportation of
gas over its system, that its negotiated contracts with customers are
not intended to be exclusionary in nature, but rather to establish
technical requirements, delivery points, rates and other terms and
conditions of service, and that it will expand its capacity if
sufficient customer demand exists.7
Pentex cites the Commission’s Policy Statement at 52 Pa. Code § 69.1401(c)(3) to support its contention
that its revised business strategy will take any expansion outside of the definition of “public utility.” Petition at 2;
¶ 4, fn. 1. However, Pentex has not asked for a determination in this regard and none is offered, here. Further, and
because the Petition is silent on this point, it is apparent from context that Pentex is not arguing that its current
Commission certificated operations have fallen outside of the jurisdiction of the Commission by virtue of Laser, nor
does Pentex speak in terms of abandonment or surrender of its certificate of public convenience.
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7
This interpretation by Laurel Mountain and MarkWest is something of an overstatement of the plain
language of the Petition, as will be discussed, infra.
8
Joint Answer at 1.
Ms. Diane Ward, one of the three Protestants from the proposed expanded service
area, agrees that granting the Petition is in the public interest but seeks to condition that approval
upon Pentex “satisfactorily” answering the questions raised at the October 7, 2011 public input
hearing. Many of those issues were raised by Ms. Ward, herself. They include: issues with
respect to Pentex’s corporate status and the timeliness and completeness of Pentex’s past reports
and filings with the Commission and in Texas; issues with respect to Pentex’s financial fitness;
issues with respect to Pentex’s technical fitness; and issues with respect to whether Pentex has in
place appropriate affiliated interest agreements. Additionally, Ms. Ward expresses apprehension
that withdrawal may be a device to allow Pentex to expand operations but then to request a post
facto determination of jurisdictional status (i.e. request Commission approval of amendment of
Pentex’s certificate of public convenience based on changes already made), thereby facilitating
Pentex’s ability to invoke eminent domain.
In resolving whether to grant the Petition, I note that as the party with the burden
of going forward, Pentex has decided—upon its reading of the Laser Reconsideration Order—
that it does not need to pursue its Application and concludes that it can meet its business needs
without coming under Commission jurisdiction. Pentex’s plans, which are stated in summary
fashion in the Petition, do not require a jurisdictional pronouncement in this Decision, and such a
pronouncement is not made and should not be inferred. Indeed, Pentex expressly reserves the
right to submit a request to amend its certificate of public convenience or to otherwise request a
determination from the Commission as to whether a proposed offering by Pentex is subject to the
Commission’s jurisdiction. Petition at 3; ¶ 5. In this sense, the representation by Laurel
Mountain and MarkWest as to Pentex’s intentions set forth in the Joint Answer and quoted above
remains the particular interpretation of those parties, only, and is not relevant to a determination,
here. The details of Pentex’s future business plans are not set out in the Petition, and Laurel
Mountain and MarkWest’s slant on those plans neither limit Pentex nor frame the context of this
Decision. It is Pentex’s explanation of the reasons for filing the Petition for Leave to Withdraw
that is dispositive of whether the Petition should be granted. Jurisdictional pronouncements with
respect to Pentex’s future plans must await the development of those plans.
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I also note that Ms. Ward’s request to impose conditions precedent on withdrawal
is somewhat misplaced, though certainly understandable. Ms. Ward convincingly raised many
issues with respect to Pentex’s fitness, generally. Those issues need to be addressed, even if that
occurs (as it must) outside of the scope of this proceeding which is coming to a conclusion.
Pentex has agreed to respond to the issues raised at the public input hearing of October 7, 2011,
by the end of January, 2012. In her Answer to the Petition to Withdraw, Ms. Ward expressed
skepticism with respect to that assurance by Pentex and has stated her own intention to file a
Complaint with the Commission, if necessary, in order to see that those issues are addressed.
That is entirely her right, of course. Indeed, any party to this proceeding, including the
Commission’s Bureau of Investigation and Enforcement, may bring an appropriate action post
January 31, 2012, if Pentex has not addressed the issues raised at the public input hearing.8
Given the comments by Laurel Mountain and MarkWest and by Ms. Ward in their
Answers, and in assessing the Petition under 52 Pa. Code § 5.94(a) and the “public interest”
standard, it is necessary to clarify just what is encompassed by the Petition and this Decision.
Simply put, Pentex has reviewed the Commission’s Laser Reconsideration Order, and Pentex
believes that it can accomplish its future business objectives without coming within the ambit of
the Commission’s jurisdiction. Consequently, Pentex wishes to withdraw its Application to
amend its certificate of public convenience. While no one opposes the Petition, Laurel Mountain
and MarkWest have put their own interpretation as to the meaning of the Petition, and Ms. Ward
has asked that approval of the Petition be conditioned upon Pentex meeting conditions precedent
relative to the issues she raised at the October 7, 2011 public input hearing. The Laurel
Mountain/MarkWest interpretation (and, potentially, the implicit inclusion of that interpretation
in this Decision) and Ms. Ward’s conditions precedent do not fit comfortably within the plain
meaning of 52 Pa. Code § 5.94(a). There are no objections to the Petition for Leave to Withdraw
8
I note that on February 1, 2012, Pentex filed an Application for Approval of Transfer of Assets and
Issuance of Certificate of Public Convenience Nunc Pro Tunc of Pentex Natural Gas Company, at Docket No.
A-2012-2287377. That Application is a direct result of some of the issues raised at the public input hearing and
purports to respond to those issues. As of the date of this Initial Decision, that Application has not yet been
published in the Pennsylvania Bulletin. That Application was, however, served on the Parties to this proceeding.
This Initial Decision is in no way a comment upon, nor should it be misconstrued as determinative with respect to,
any issue that may arise with respect to that Application.
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the Application. The sole issue is whether granting the Petition is in the public interest.9
Granting the Petition is in the public interest as it would be premature, at best, to attempt to
compel Pentex to pursue an Application for additional authority that, on the basis of its revised
business plans and its interpretation of the Laser Reconsideration Order, Pentex no longer thinks
it needs, and such an effort would be a profligate waste of time and resources for all involved.
Therefore, the Petition will be granted.
CONCLUSIONS OF LAW
1.
The Commission has jurisdiction over the parties in this proceeding.
66 Pa. C.S. §§ 1102, 1103.
2.
As the party seeking affirmative relief from the Commission, the
Applicant bears the burden of proof. 66 Pa. C.S. § 332(a).
3.
A party desiring to withdraw a pleading in a contested proceeding may file
a petition for leave to withdraw the appropriate document with the Commission and serve it upon
the other parties. The petition must set forth the reasons for the withdrawal. A party may object
to the petition. 52 Pa. Code §5.94(a).
4.
After considering the petition for leave to withdraw, any objection thereto
and the public interest, the presiding officer or the Commission will determine whether the
withdrawal will be permitted. 52 Pa. Code §5.94(a).
9
Unlike Laser, there are no underlying Commission Orders in this proceeding, so the issue of whether prior
Orders should be rescinded does not arise.
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ORDER
THEREFORE,
IT IS ORDERED:
1.
That the Petition for Leave to Withdraw Application filed by Pentex
Pipeline Company on December 5, 2011, is granted.
2.
That this matter be marked closed.
Date: February 9, 2012
Dennis J. Buckley
Administrative Law Judge
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